U.S. Indices closed higher on Friday, with Tech leading the gains, and as such the NASDAQ outperformance, which saw tailwinds from Oracle (ORCL) after reports TikTok is to sell its US entity. The haven sectors were lagging with Consumer Staples, Discretionary and Utilities all lagging. Discretionary names were weighed on by Nike (NKE) earnings which saw the stock plummet on weak China sales. T-Notes were lower across the curve with pressure felt from downside in JGBs overnight post the Bank of Japan, and also commentary from Fed’s Williams that he is in no rush to change policy, albeit he believes there is still room to move lower. In FX, the Dollar was bid primarily supported by Japanese Yen weakness. There was a bout of Yen strength in wake of some official jawboning from the Finance Minister Katayama, who said that moves are clearly one-sided and rapid – which is usually a criterion that has to be met before the Finance Ministry intervenes in FX. However, the move did fade. Crude saw gains with price action supported after a Russian oil rig was hit by Ukrainian drones in the Caspian Sea. Gold and silver extended on recent upside with Gold rising above USD 4,350/oz while silver pushed to a fresh record high above USD 67/oz. Speaking on CPI, Fed Member Williams, said the recent data was encouraging and shows more disinflation, although data was distorted in some categories which pushed down the reading. Williams said he will need more to get a good read on inflation and added that new jobs data shows steady private sector job gains. The unemployment rate may have been pushed up by distortions, but it is not a surprising read, and jobs data does not show sharp deterioration in the hiring market. The influential member said data broadly consistent with recent trends and recent Fed cut. When asked about if recent data changes his rate outlook, said it is only a bit of data, there is a lot more due. The New York Fed President does not have a sense of urgency on changing Monetary Policy, and policy is well positioned. Added policy is mildly restrictive, and has some room to get back to neutral. Looking ahead, Williams wants to see how the economy performs as the data comes in, and the Fed is in a good position to balance its goals. On forecasts, he projects GDP growth for this year between 1.5-1.75%, and 2026 GDP around 2.25%. He Expects inflation to come down next year and in 2027, citing one time tariff impact and higher productivity growth. Williams feels pretty good about the economic base case. On the balance sheet, Williams reiterated the Fed is not doing QE, and Fed is buying T-Bills to provide reserves to banking system Current asset buying is not designed to move long-term rates, and it is a technical move. The December University of Michigan Sentiment reading was unexpectedly revised lower to 52.9 from 53.3 (exp. 53.4). Other components were revised lower. Conditions finished at 50.4 from 50.7, and Expectations moved to 54.6 from 55.0. Looking at the inflation expectations, 1 Year shifted higher to 4.2% from 4.1%, while the 5 Year expectation was unrevised at 3.2%. Existing Home Sales rose 0.5% in November to 4.13 million from 4.11 million, falling short of the expected 4.15 million. By region, sales increased in the Northeast and South, showed no change in the West, and fell in the Midwest. NAR Chief Economist Lawrence Yun writes, “Inventory growth is beginning to stall. With distressed property sales at historic lows and housing wealth at an all-time high, homeowners are in no rush to list their properties during the winter months.” The Bank of Japan hiked rates by 25bps as expected, which saw JGBs take a leg lower, weighing on global fixed income. The press conference from Governor Ueda left markets in the dark on when the next rate hike from the BoJ will be. Ueda also noted that they will make a decision on the rate hike after checking the impact on the economy. Once this was digested, the move in the Yen was clearly dovish with the Yen falling, but JGBs remained pressured – as did T-Notes. Elsewhere, Oil closed higher by 1% while Gold was flat.
To mark my 3300th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 122 points yesterday on Friday is now ahead by 2509 points for December after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 0.88% higher at a price of 6834.
The Dow Jones Industrial Average closed 183 points higher for a 0.38% gain at a price of 48,134.
The NASDAQ 100 closed 1.31% higher at a price of 25,346.
The Stoxx Europe 600 Index closed 0.37% higher.
This morning, the MSCI Asia Pacific closed 0.3% higher.
This morning, the Nikkei closed 1.81% higher at a price of 50,402.
Currencies
The Bloomberg Dollar Spot Index closed 0.31% higher.
The Euro closed 0.29% lower at $1.1708.
The British Pound closed 0.12% lower at $1.3380.
The Japanese Yen fell 1.31% closing at $157.75
Bonds
U.K.’s 10-Year Gilt closed 4 basis points higher at 4.53%.
Germany’s 10-Year Bund Yield closed 5 basis points higher at 2.91%
U.S.10 Year Treasury closed 1 basis points higher at 4.15%.
Commodities
West Texas Intermediate crude closed 0.93% higher at $56.52 a barrel.
Gold closed 0.15% higher at $4348.10 an ounce.
This morning on the Economic Front we have U.K. GDP at 9.30 am. The only other data of note is U.S. Personal Income/Spending and PCE at 3.00 pm.
Cash S&P 500
The S&P made its top on October 29, had a sharp correction in November for an interim low on November 21, before rallying over the past month, hitting a secondary top on December 11. The failure of the S&P to make a new high in December is a potential bearish signal. We will see if a higher high can be reached over the next two weeks as we approach the ‘’Santa Window’’. It is interesting to point out that the crash of 1929 started on October 29. Could history repeat or ‘’RHYME’’ now? We are seeing a number of danger signals. One big one is the overwhelming bullish sentiment among Wall Street analysts. This is often seen at important tops. It means that most of the cash is committed. The Fed sems concerned about having ample liquidity in the financial system. It first ended the fictitious QT (quantitative tightening) and then announced the purchase of $40 billion in short-term T-Bills, which could be called QE (quantitative easing). This is very strange and no reasonable explanation has been given by the Fed. This has lowered the yield on T-Bills to 3.6%. Historically, when T-Bill yields decline from a top, the bear market in stocks starts, contrary to popular opinion. We already hear analysts say that the decline in yields is bullish for the stock market. History shows the opposite. Remember, the majority are usually wrong. The two biggest dangers that I have warned about are the record amount of leverage, i.e. Margin Debt, and speculation at ridiculous levels. Those are the main factors that turn a normal stock market decline into a CRASH. Now, we see those conditions have ripened. According to Goldman Sachs, the Market Cap of the largest stock is now 750 times the Market Cap of a 75th percentile stock. To put this in perspective, even at the peak of the 2000 dot-com bubble, the metric only reached 550X. We are now operating at concentration levels that exceed the dot-com peak and rival the extremes of 1932. In the third quarter of this year, the notional value of derivatives held by banks reached a record high of $231 TRILLION. Such a sum is too big to even imagine. ‘’Notional’’ means not necessarily all at risk. However, if just 10% is at risk, that is over $23 TRILLION. There is no way the Fed can bail that amount out when the dominoes start falling. Any further rally from here over the next two weeks will see me start to put on a macro short position. I am still flat the S&P has the market never came close to Thursday’s sell range and is trading at 6854 this morning – 120 Handles higher from where I marked prices on Thursday morning. The S&P has resistance from 6890/6920 where I will be a seller with no stop. If triggered, I will have a T/P level at 6855. I no longer want to be a buyer of the S&P at this time. If this view changes, I will be back with a new update for my Platinum Members.
EUR/USD
I am still short the Euro at an average rate of 1.1735 with the same 1.1835 ‘Closing Stop’. I will now raise my T/P level to 1.1710. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
I am still long the Dollar at an average rate of 98.80. Today I will leave my T/P level unchanged at 99.10 while also leaving my 97.95 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
I am still flat. Today, I will continue to be a buyer on any dip lower to 2410/2470 with the same 2355 ‘Closing Stop’. Ahead of this week I have no interest in selling the market. If I am taken long, I will have a T/P level at 2520.
FTSE 100
Late Friday the FTSE hit my 9910-sell level. To reduce risk I have now exited this position here at 9878 and I am now flat. The FTSE has resistance from 9940/10010 where I will be a small seller with a 10085 ‘Closing Stop’. If I am taken short, I will have a T/P level at 9880.
Dow Rolling Contract
I am still flat. The Dow never came close to Thursday’s buy range before rallying over the past two trading sessions. The Dow has short-term resistance from 48450/48750 where I will be a small seller with a 49005 wider ‘Closing Stop’. If I am taken short, I will have a T/P level at 48110.
Cash NASDAQ 100
The NDX reversed all of Wednesday losses, trading 600 points higher from where I marked prices of Thursday morning. It is so hard to be short especially as we are approaching the Santa Window where markets tend to rally. This move higher saw my 24990 T/P level triggered on my latest 24930 average long position and I am now flat. This morning, the NDX is trading at 25460. We have resistance from 25650/25850 where I will again be a seller with a 26005 ‘Closing Stop’. If I am taken short, I will have a T/P level at 25490.
December BUND
The Bund fell shy of Thursday’s 127.70 T/P level with a high of 127.72 before following the JGBs lower. This morning, the Bund hit my second buy level at 126.60 for a now 126.95 average long position. I will now lower my T/P level to 127.40 while leaving my 125.95 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
No Change: I am still flat. I have no interest in chasing the price of Gold higher. Neither do I want to be short. As a result, I will wait for a sell-off to initiate a new long position. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
Thankfully, Silver traded lower to my 65.10 T/P level on my 65.40 average short position before surging to close at new record highs on Friday at a price of 67.20. The 14 Day RSI for Silver is now at an unsustainable 92. Overnight, Silver has rallied a further 3%, trading above 69 as I go to post. Silver further resistance from 69.50/71.00 where I will again be a seller with a higher 72.35 ‘Closing Stop’. If I am taken short, I will have a T/P level at 67.90.
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